Explanation of Problem 8-14 Year 6 OCI

# Explanation of Problem 8-14 Year 6 OCI - \$2,000,000...

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Explanation of Problem 8-14 Year 6 OCI Problem 8-14, Year 6: Many times you will see the problem say that the asset has a usable life of 5 years (so revs and operating expenses will end after five years, all you have in Year 6 is depreciation), but here it does not say that, and in fact asks you to use the data to estimate 6 years of financial results from the investment. Year 6 depreciation on a five-year asset is 5% (see pg. 94):
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Unformatted text preview: \$2,000,000 installed cost of asset x 0.05 = \$100,000 depreciation expense Remember to add a row below NPAT for adding depreciation (solution does not show this, but template you will have available does show it): NPAT = \$372,000 + Depr = \$100,000------------------------------------= OCI = \$472,000, as shown...
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